The news about Polaroid Corporation has been
troubling for the past year or more-first the company missed its
targets for sales and profits, then it sold off many assets but was
still very weak financially, and finally it went into Chapter 11
bankruptcy protection. However, as most people have probably
noticed, Polaroid products didn't vanish from the market.

And now Polaroid is emerging from Chapter 11 as a new, privately
held Polaroid Corporation owned by OEP Imaging Corporation. (See
box on page 6.) The new arrangement eliminates more than $1 billion
of debt for Polaroid and, according to the Boston Globe, the
purchase by OEP gives the instant photo pioneer "a chance to end
its bankruptcy within weeks and continue in business as a
well-capitalized competitor." Polaroid lawyers said the deal could
mean that all current Polaroid employees would keep their jobs.
(But Polaroid has already cut its work force in half since
2001.)

Gary DiCamillo, who had been Polaroid's CEO and Chairman of the
Board of Directors for six and a half years, left the company in
July. Then John W. Loose, a board member since 1994, was named
Chairman of the Board briefly, until the company was sold. Now, for
the new company's day-to-day operations, there's no CEO; instead
there's the Office of the President, comprised of William L.
Flaherty and Neal D. Goldman, both Polaroid Executive Vice
Presidents. As for the new Polaroid's Board of Directors, OEP
partner Charles F. Auster will be Chairman of the Board.

So now that the new corporate ownership has been settled, what
about Polaroid products?

Simply put, Polaroid will keep doing what it has done best-continue
to manufacture and sell instant cameras and film. Financial analyst
Ulysses Yannas, who follows Polaroid for Buckman, Buckman &
Reid, points out that since over 150 million Polaroid cameras have
been sold since 1976, the continuing demand for film will be
significant even if only a small percentage of the cameras are
still in use.

Polaroid will also still sell Polaroid-brand non-instant film such
as 35mm, OEM'd for them by Agfa. (News reports say Wal-Mart is
keeping this Polaroid-branded film as their house brand.) At this
point it looks like the distribution channels for these products
will stay pretty much the same.

Concord Camera Corp. of Florida has made a $2 million deal with
Polaroid (which could reach $6 million over six years) to make
Polaroid-brand 35mm and APS cameras, both one-time-use and
reloadable. There are seven cameras in the Polaroid-brand OTU
camera line, including flash models in both color and
black-and-white film, daylight (non-flash) models, panoramic, and
waterproof, all pre-loaded with 27-exposure 400 speed film.

In reloadable cameras, the new Polaroid compact camera line offers
consumers point-and-shoot choices that include a big viewfinder
camera, a slim-line model, and an ultra-compact APS model with
three picture formats, at retail prices up to $29.99. More
sophisticated models are in the Polaroid Zoom camera line, with
eight zoom cameras that include both twist zoom and power zoom
designs and zoom ranges from 30-50mm up to 38-125mm, at retail
prices up to $99.99.

All of Concord's Polaroid-brand cameras should be available to
retailers during the fourth quarter this year, through the same
channels used to buy other Concord products, which include the
brand names Concord, Keystone, Concord Eye Q, Le Clic, Goldline,
Apex, and Argus.

Coming on the heels of the Concord deal, Spectra Merchandising
International Inc. of Chicago announced it has an agreement with
Polaroid to market a new line of Polaroid-brand digital cameras in
the United States and Canada. The first one, already reaching
retailers, is the Polaroid PDC 2150, a compact 2.1 megapixel model
(1600 x 1200), non-zoom but with 2X digital zoom, 8 MB of internal
memory, multi-mode automatic flash, LCD screen plus optical
viewfinder, and a video-out jack to show still photos on any TV
set. When tethered to a computer, the PDC 2150 can also be used as
a webcam

Spectra's initial Polaroid-brand line of digicams will include
six other models ranging in resolution and features from advanced
webcams to 3- and 4-megapixel digital cameras. All should be
available to retailers by the first quarter of next year, with
retail prices ranging from $39.99 to $399.

What about special "camera store" models of Polaroid digicams?
Patricia Schoenberg, president of Spectra, told PTN they are "on
the roadmap" but not yet scheduled for introduction.

"The PDC 2150 is the first in a series of innovative Polaroid
cameras that will bring the latest digital technology to consumers
at especially attractive prices," Schoenberg noted. "The Polaroid
brand is one of the most trusted in the world."

Dan Singleton, Polaroid's director of licensing, added that the
Spectra-Polaroid partnership "should go a long way toward
re-establishing Polaroid as a dominant player in the consumer
digital camera category."

Who got what from the Polaroid deal?

The new, privately-held Polaroid Corporation is owned by OEP
Imaging Corporation, created for the purchase by the venture
capital group OEP, One Equity Partners, which manages $3.5 billion
in investments for Bank One, sixth-largest financial institution in
the U.S. OEP Imaging bought the old Polaroid for $255 million in
cash plus taking over approximately another $200 million in
liabilities. The purchase eliminates more than $1 billion of debt
for Polaroid.